Various Supply chain drivers Production Facilities Inventory Transportation Information

Various supply Chain drivers

1. By
Dr Peeyush Vats
Supply Chain Drivers

2. Supply Chain

3. Drivers of Supply Chain Performance
To understand how company can improve supply chain performance
in terms of responsiveness and efficiency, it must examine the
logistical and cross functional drivers of the SC.
These driver interact with each other to determine the SC
performance in terms of responsiveness and efficiency.
The goal is to structure the drivers to achieve the desired level of
responsiveness at the lowest possible cost.
There are 5 drivers in the SC:
Production
Facilities
Inventory
Transportation
Information

4. Drivers of supply chain
performance

5. Production
This driver can be made very responsive by building factories
that have a lot of excess capacity and use flexible manufacturing
techniques to produce a wide range of items.  To be even more
responsive, a company could do their production in many
smaller plants that are close to major groups of customers so
delivery times would be shorter.  If efficiency is desirable, then a
company can build factories with very little excess capacity and
have those factories optimized for producing a limited range of
items.  Further efficiency can also be gained by centralizing
production in large central plants to get better economies of
scale, even though delivery times might be longer.

6. Inventory
Responsiveness can be had by stocking high levels of
inventory for a wide range of products.  Additional
responsiveness can be gained by stocking products at
many locations so as to have the inventory close to
customers and available to them immediately. 
Efficiency in inventory management would call for
reducing inventory levels of all items and especially of
items that do not sell as frequently.  Also, economies of
scale and cost savings can be gotten by stocking
inventory in only a few central locations such as
regional distribution centres (DCs).

7. Facilities Location
A location decision that emphasizes responsiveness
would be one where a company establishes many
locations that are close to its customer base.  For
example, fast-food chains use location to be very
responsive to their customers by opening up lots of
stores in high volume markets. Efficiency can be
achieved by operating from only a few locations and
centralizing activities in common locations.  An
example of this is the way e-commerce retailers serve
large geographical markets from only a few central
locations that perform a wide range of activities.

8. Factors affecting the facilities location
- Quality of worker
- Cost of workers
- Cost of facility
- Availability of infrastructure
- Proximity to customers
- The location of that firm’s other
facilities
- Tax effect

9. Transportation
Moving inventory from point to point in the SC
Components of Transportation Decisions:
Design of the transportation network
Transportation network is the collection of transportation modes, location, and routes
along which product can be shipped. Company must decide whether transportation from
supply source will be direct to demand point or go through intermediate consolidation
point, whether multi supply or demand point will be included in a single run or not.
Choice of transportation mode
Companies can choose between air, rail, sea, and pipeline. Each mode has different
characteristics (speed, size, cost, flexibility
Transportation Related Metrics:
Average inbound and outbound transportation cost
Average incoming and outbound shipment size
Average inbound and outbound transportation cost per shipment

10. Information
Consist of data and analysis concerning facilities, inventory, transportation, costs, prices, and
customers throughout the SC.
Component of Information Decisions:
Push vs Pull
Push system require information in the form of elaborate MRP system to take the MPS and
roll it back, creating schedules for suppliers with part types, quantities, and delivery dates.
Pull system require information on actual demand to be transmitted extremely quickly
throughout the entire chain so that production and distribution of product may reflect the
real demand accurately.
Coordination and Information Sharing
SC coordination occurs when all stages of a SC work toward the objectives of maximizing
total SC profitability based on shared information. Lack of coordination can result in
significant loss of SC surplus.
Forecasting and Aggregate Supply Planning
Companies often use forecasts both on tactical level to schedule production and on
strategic level to determine whether to build new plants or even whether to enter a new
market.

11. Thank You